What is the maximum amount Mrcool can increase the royalty rate in any calendar year during the term of the agreement?

According to Mrcool's 2025 Franchise Disclosure Document, Mrcool has the discretion to increase the royalty rate at any time. However, the royalty rate cannot exceed 2.5% of your monthly Gross Sales. Furthermore, Mrcool will not increase the royalty rate by more than 0.5% in any calendar year during the term of the agreement. Mrcool also retains the right to modify the Minimum Royalty in any renewal Franchise Agreement based on their Reasonable Business Judgment. During the term of any renewal Franchise Agreement, the Minimum Royalty will not be less than the Minimum Royalty set forth in the table for Year "4 and thereafter."

For a prospective Mrcool franchisee, this means that while the initial royalty rate may be favorable, Mrcool has the ability to increase it over time. The 0.5% annual cap provides some predictability, but franchisees should still factor in potential royalty increases when projecting their long-term profitability. The minimum royalty schedule provides a baseline, but the actual royalty paid will be the greater of the percentage of gross sales or the minimum royalty amount.

It's important to note that the minimum royalty can be modified upon renewal of the franchise agreement, potentially impacting the financial terms for franchisees who choose to renew. Franchisees should carefully consider these potential changes when evaluating the overall cost and benefits of the Mrcool franchise opportunity and when negotiating renewal terms.